Coinbase CEO Brian Armstrong has responded to rumors suggesting a widening divide between his company and the Trump administration, emphasizing the ongoing collaboration on the CLARITY Act is still “super constructive.” These comments come in the wake of a report by crypto journalist Eleanor Terrett, which indicated that officials from the administration were irate with Coinbase and were contemplating withdrawing support for the legislation unless the exchange engaged in negotiations around stablecoin yields.
The underlying tension centers on the traditional banking sector’s apprehensions regarding potential “deposit flight.” Many community and regional banks have raised alarms that permitting crypto exchanges to offer attractive yields on stablecoins could lead to significant withdrawals from their institutions. The banks argue that customers might increasingly transfer their funds from low-interest savings accounts to digital assets that are pegged to the dollar, creating risks for the overall stability of the banking system.
Armstrong, however, challenged the portrayal of the White House as threatening to terminate the bill. Instead, he described the administration’s actions as an instructive push to address the valid concerns of regional banks. He highlighted the administration’s directive for Coinbase to engage in negotiations with these banks, suggesting that specific arrangements and solutions would be forthcoming.
“Actually, we’ve been cooking up some good ideas on how we can help the community banks specifically in this bill, since that’s what this is about,” he shared on the social media platform X.
This friction underscores the precariousness of the CLARITY Act, a comprehensive bill designed to bring much-needed regulatory clarity to the digital asset industry. Earlier in the week, Coinbase hinted at a possible withdrawal of its support for the bill, citing certain provisions that would ban tokenized stocks, impose restrictions on decentralized finance protocols, and eliminate rewards for stablecoins.
Industry watchers are monitoring the situation closely, with Ripple CEO Brad Garlinghouse commenting on the legislative process. He noted that while the negotiations have been contentious, the Senate’s progress represents a “massive step forward” for consumer protection and the establishment of a functional framework for the industry. Garlinghouse asserted, “Ripple (and I) know firsthand that clarity beats chaos, and this bill’s success is crypto’s success. We are at the table and will continue to move forward with fair debate.”
However, despite the prevailing optimism, prediction markets appear more cautious regarding the bill’s prospects for passage. On the betting platform Polymarket, traders currently assign only a 41% probability to the market structure bill being enacted into law this year.
